This seems to be the checkbox to control how the Fn keys behave for setting hardware vs software controls. 10.2.8 and probably 10.3 don't have this.
this has been on the OS X Versions as far back as I can remember. It's for laptops that have the brightness and sound on the functions key. Mostly, this is used for dashboard and other stuff...
From what I remember, 10.2.8 didn't have it. After the upgrade the option appeared, and my problem was solved without me changing it manually.
On my Mini F12 does Dashboard without a modifier, and now on my iBook I press Fn-F12 for it. Otherwise F12 ejects the CD, as it should. This didn't happen before the upgrade. I had to press Fn-F12 to eject CDs.